Though the nation's second-largest industry seems like it doesn't change much, there are myriad, nuanced forces that shape the way contractors do business and build structures — and Construction Dive is spotting some of these dynamics one story at a time. Here are the top trends to expect in 2020.
Scrutiny into structural processes will aim to make catastrophes more impossible
The national spotlight last year was on a few major structural failures that resulted in several deaths, and the ensuing legal and public relations messes are likely to change how some contractors do business in 2020.
In October, a passerby's video showed the upper floors of the Hard Rock Hotel in New Orleans slide into those below, killing three workers and injuring several others. Lawsuits brought by the victims' families and survivors allege inadequate shoring of concrete floors, the owner's reluctance to pay for qualified workers and shortcuts that put the project and those working within the structure in danger (although investigators have not yet released the definitive cause).
Last year also saw the resolution of questions surrounding who was to blame for the deadly 2018 Florida International University pedestrian bridge collapse. The National Transportation Safety Board took all parties —contractors, designers, consultants, FIU and the Florida DOT — to task for not stopping work, failing to shore up the bridge and for not blocking the flow of traffic underneath the bridge when it became apparent that developing cracks suggested a hazardous structural issue. The primary cause, however, according to the NTSB, was a failure in design.
So, what impact will these and other tragedies have on contractors next year and thereafter?
Construction companies could experience more scrutiny from their insurance carriers, whose deep pockets are typically the primary target of lawsuits, Dan Hanson, senior vice president of management liability and client experience for Marsh & McLennan Agency in Minneapolis, told Construction Dive in November.
And while no design firms or contractors are likely to admit that their in-house systems of checks and balances are lacking, the NTSB's finding that there were breakdowns in communications and in the design and construction of the FIU bridge is sure to force contractors to reevaluate their procedures.
If nothing else, the threat of criminal prosecution could force construction firms to take a closer look at the design and execution of their projects. For example, Kevin Otto, the owner of the now-defunct Atlantic Drain Service in Boston, was recently found guilty on two counts of manslaughter and sentenced to two years in jail for the October 2016 trench-collapse deaths of two employees.
In a bit of wishful thinking, 2020 will be a year in which the industry and all stakeholders down the individual worker will aim to remedy mistakes of yesteryear by proactive approaches to erecting buildings safely and (structurally) soundly.
Modular will see more momentum in the market
The past year was a big one for modular building in the commercial construction market. Some superlatives and firsts, along with production facility openings and closings, took center stage in the news. And though it still only accounts for around 4% of the market, it may have attracted more attention than ever before.
Some observers remain skeptical, and it’s no mistake that the method still has a long way to go toward a greater, more steady flow of demand from owners and adoption by contractors, but 2020 will no doubt be even more monumental for the business model that is no doubt slowly changing the industry.
The single biggest barrier to further adoption is that “the culture is not ready for it,” said Salvatore Verrastro, a principal at Spillman Farmer Architects and representative of the American Institute of Architects (AIA).
That could change as more owners, such as hotel heavyweights like Marriott seek out the schedule efficiencies modular offers, and more framework for adoption is put in place. The latter is making headway as the AIA, for one, has implemented an official guide for architects meant to explain and promote the method.
We implore all contractors, designers and owners to take a greater look at modular as we’re sure to look back at the end of 2020 surprised to see what developments the method has made by then. We’ll keep track of all the changes in our new Modular Monitor monthly column.
Diversity and equity come to the forefront through contract mandates
The effects of the skilled labor shortage can be seen in all areas of the construction industry, whether a company is looking to fill craftsmen slots or trying to hire subcontractors. Those efforts are even more daunting when community benefits agreements on private project or government mandates on public ones come into play requiring general contractors to employ a certain percentage of local, disadvantaged, small, minority, veteran or women-owned businesses.
The legal language of some of these rules sometimes allow contractors a reprieve if they can prove there are not enough companies or workers to meet the requirements, but some don't.
During construction of the Detroit Redwings hockey arena, for example, the city of Detroit famously fined contractors $5.2 million for not meeting the 51% local worker requirement, even though it agreed that the firms tried their best to meet the goal. There just weren't enough skilled workers. Even so, the city has since floated a 51% local hire requirement for all city-funded work.
Those developing and building large projects are most often expected to spread the wealth by making sure the most disadvantaged in the area are included. Negotiations between San Jose, California and Google have started regarding the community benefits that the internet search giant will provide as it develops a transit village consisting of more than 7 million square feet of construction in the downtown area. It's no surprise that the city has listed hiring and workforce development as some of the benefits it expects in exchange for allowing Google to build there.
And, of course, federal, taxpayer-supported construction projects, like the National Geospatial-Intelligence Agency’s $1.7 billion St. Louis facility, have minority and disadvantaged contractor hiring goals baked in and differ depending on the geographic area.
One possibility is that contractors will cast a wider net by breaking up the work into smaller packages in order to include more local and minority firms that might not have the financial wherewithal to tackle big projects. More contractors will also engage in early planning so that they have time to build up a robust list of minority subcontractors.
Automation will deliver efficiencies on jobsites without stealing jobs
"We're continuing our focus on autonomy, semi-autonomy and remote operation as we expand our offerings," said Caterpillar Chairman and CEO Jim Umpleby during an earnings call in October.
But on-site workers don’t have to be concerned that robots or other autonomous equipment will be stealing their jobs. Instead, during this no-end-in-sight skilled labor shortage, automation could be one answer to vacant positions; plus, 54% of U.S. and U.K. construction workers surveyed by Volvo Construction Equipment said they think that advances in tech will speed up construction.
But while there are a ballooning number of jobsite innovations as well as widely used design and project management technologies, “So far, the reality is that folks see each technology as separate,” Amr Raafat, who pioneered drone flight BIM capture for Windover Construction, and who won an Autodesk award for it, told Construction Dive. “They look at VR by itself and drones by themselves,” said the vice president of VDC and technology at Windover.
But that will likely change in 2020.
Contractors seem primed to welcome more automation, because it seems increasingly inevitable that jobsite and back-office technologies will integrate, as Raafat showcased with drone flights.
The Volvo study estimated there would be 7,000 robots carrying construction work by 2025. For example, Boston Dynamics’ robot dog Spot, which has gotten a lot of notoriety, is beginning early stages of autonomously capturing photographs of jobsite progress, a task previously done by workers on-site with other responsibilities.
Incorporating automated tech into daily life on a construction site will still take a while, but the process has started, as seen with industry heavyweights like Caterpillar turning a heightened focus to autonomous operation.
Nevertheless, automated heavy machinery comes with risks, especially when it’s in the realm of artificial intelligence. Nearly half of the respondents in the Volvo study said that construction workers aren’t worried about losing jobs to robots but they are concerned about jobsite safety risks involving larger autonomous machinery.
Top contractors will continue reconsidering megaprojects with inherently high-risk contracts
For years, builders have looked beyond the traditional design-bid-build project delivery method to maximize efficiency and speed up construction time on large projects, but some major U.S. contractors hit roadblocks with one such approach in 2019.
Last year, executives from Granite Construction and Fluor called out public-private partnership arrangements for having detrimental effects on business and Skanska announced that it would no longer pursue major design-build transportation public-private partnerships in which it held an equity stake. Lendlease, too, said it would move toward adopting a lower-risk profile surrounding issues like contract and project types.
One of contractors’ biggest problems with these arrangements is that they involve fixed-price agreements that lock them into a set fee and timetable. As things change on these jobs, additional costs are often incurred, leading to disputes between owner and contractor about who will pay for them.
With some of the best-equipped contractors in the country moving away from P3s, the question for 2020 is how large infrastructure projects will continue to get built, said Nicole Gelinas, a senior fellow at the Manhattan Institute, a New York City-based urban policy think tank.
What’s more, the long-term nature of large projects has made them more volatile in recent years due to growing uncertainty over labor and materials prices, two factors that will continue to affect contractors in 2020.
“A lot of state and city governments are depending on these large companies to bid on their projects, but they are kind of pulling back,” she said. “The bidding pool looks very shallow now.”
The trend is worrying for those who rely on P3s to get their projects built because as America’s infrastructure continues to age, there will be a greater need for creative approaches to large-scale public projects. Darryl D. VanMeter, assistant P3 division director at the Georgia Department of Transportation, said his agency is committed to making P3s work.
“Across the nation in the transportation market, there are question marks about funding these projects so every state has to be more creative about how to fund them and get even more creative about how they deliver them," he said.